Weekly US inventory data, released on 28 June, was generally bullish. Gasoline stocks unexpectedly fell by 0.5 per cent to 212.4 million barrels and crude supplies also fell by 1 per cent to 343.7 million barrels. ‘The US weekly oil data continues the recent indications of strong gasoline demand, with the gasoline market continuing to tighten as imports fall back,’ says Paul Horsnell, analyst at Barclays Capital. ‘There has been much talk of gasoline demand weakening, but the latest weekly reading is, at 9.54 million barrels a day, the highest weekly reading since last July. The more the Q2 data firms up, the more it appears to us that the global seasonal stockbuild has fallen short of normal.’

The international stand-off with Iran is providing constant support to prices, and the statements made by Tehran over the course of the week further scared traders. ‘Negotiations with the US are of no use to us,’ said Supreme Leader Ayatollah Ali Khamenei on 27 June. ‘We will not negotiate with anyone over the undeniable right of nuclear technology.’ The comments overshadowed more conciliatory noises made by government spokesman Gholam Hossein Elham, who said the previous day that conditions were favourable for solving the nuclear issue diplomatically and that no plans existed to disrupt oil supplies as a weapon in the dispute.

A more immediate concern in Washington is potential problems with supplies from Latin America, as ‘oil nationalism’ spreads in the region. A leaked report in late June by the US military warned that the moves to reclaim oilfields from foreign oil companies in places such as Ecuador and Bolivia would damage production over the longer term. ‘A re-emergence of state control in the energy sector will likely increase inefficiencies and, beyond an increase in short-term profits, will hamper efforts to increase long-term supplies and production,’ it said. A recent congressional investigation also concluded that the US was vulnerable to Venezuelan President Chavez’s threat to cut off oil supplies.

Some rare good news emerged from Iraq in late June, as loadings began from Ceyhan of crude pumped through the northern export pipeline from the Kirkuk fields. The link has been closed almost constantly since the US invasion in 2003 due to sabotage. southern Basra terminal are running at about 1.5 million b/d.